Tuesday 6 December 2016

Most are renewing their PCP deals

Published 13/01/2016 | 02:30

When you buy a car on a PCP you are essentially paying to use it for a fixed number of years
When you buy a car on a PCP you are essentially paying to use it for a fixed number of years

As a sign of how PCPs have taken over swathes of car buying territory these days, Volkswagen executives here say three-in-four people on their Personal Contract Plans are renewing for a subsequent car deal.

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With sellers and buyers growing more accustomed to the ins and outs of what can be a PCP maze, the experts have also told us that the optimum average deposit is 22pc.

Nearly four-in-10 (38.5pc) VW car sales last year were financed through Volkswagen Bank – that includes car rentals. And 65pc of those deals were in the form of PCP.

There is further evidence too that people are buying much higher-spec cars.

A Volkswagen executive revealed that 61pc of PCP sales are what they call third-level, or Highline trim.  While these cars are more expensive, the company is using a lower interest rate on PCP (1.9pc) to encourage potential buyers.

After paying a slightly larger deposit, the monthly repayments work out at exactly the same as less-well-equipped cars – the difference being that the latter are on higher interest levels.

It is also becoming clear that a deposit of 22pc of the car’s price is the best target as it means buyers are far less likely to have to put any of their own money towards a fresh/subsequent PCP deal for a new motor.

Indo Motoring

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